CHAPTER ONE: GENERAL INTRODUCTION 1.1 BACKGROUND OF THESTUDY

Small and Medium Scale Enterprises (SMEs) are the backbone of every economy and are key source of economic growth, dynamism and flexibility in advanced industrialized countries, as well as in emerging and developing economies. SMEs constitute the dominant form of business organization, accounting for over 95% and up to 99% of enterprises depending on the country (Osagie 2004:25). They are responsible for between 60-70% net job creations in less-developed or developing countries.

While not every small business turns into a multinational, they all face the same issue in their early days – finding the money to enable them to start and build up the business. It is harder for them to borrow money from banks  or finding private investors than for larger firms.

Microfinance institutions are semi-formal organization and a subset of flexible structure and systems which provide a wide range of financial and saving needs of small scale enterprises in developing countries where top-town formal financial institutions have failed to address the credit need of the real sector of the economy.

Hence, the intention of this research is to undertake a survey of financing options for small and medium scale enterprises in Sokoto State.

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